1.

Current Performance:
Apple Inc., formerly Apple Computer, Inc., is an American multinational
corporation headquartered in Cupertino, California that designs, develops,
and sells consumer electronics, computer software and personal computers.
Its best-known hardware products are the Mac line of computers, the iPod
music player, the iPhone smart phone, and the iPad tablet computer. Its
software includes the OS X and iOS operating systems, the iTunes media
browser, the Safari web browser, and the iLife and iWork creativity and
production suites. The company was founded on April 1, 1976, and
incorporated as Apple Computer, Inc. on January 3, 1977.The word
"Computer" was removed from its name on January 9, 2007 Apple is the
world's second-largest information technology company by revenue after
Samsung Electronics and the world's third-largest mobile phone maker after
Samsung and Nokia. Fortune magazine named Apple the most admired
company in the United States in 2008, and in the world from 2008 to
2012.However, the company has received criticism for its contractors' labor
practices, and for Apple's own environmental and business practices As of
May 2013, Apple maintains 406 retail stores in fourteen countries as well as
the online Apple Store and iTunes Store. It is the second-largest publicly
traded corporation in the world by market capitalization, with an estimated
value of US$414 billion as of January 2013. As of September 29, 2012, the
company had 72,800 permanent full-time 2 employees and 3,300 temporary
full-time employees worldwide. Its worldwide annual revenue in 2012 totaled
$156 billion. In May 2013, Apple entered the top ten of the Fortune 500 list of
companies for the first time, rising 11 places above its 2012 ranking to take
the sixth position. Apple was established on April 1, 1976, by Steve Jobs,
Steve Wozniak and Ronald Wayne to sell the Apple I personal computer kit.
The kits were hand-built by Wozniakand first shown to the public at the
Homebrew Computer Club. The Apple I was sold as a motherboard ,The
Apple I went on sale in July 1976 and was market-priced at $666.66 On
August 24, 2011, Jobs resigned his position as CEO of Apple. He was replaced
by Tim Cook and Jobs became Apple's chairman On October 4, 2011, Apple
announced the iPhone 4S, which included an improved camera with 1080p
video recording, a dual core A5 chip capable of 7 times faster graphics than
the A4, an "intelligent software assistant" named Siri, and cloud-sourced data
with iCloud. The following day, on October 5, 2011, Apple announced that
Jobs had died, marking the end of an era for Apple Inc. The iPhone 4S was
officially released on October 14, 2011.
Board of director:
Larry Page, one of our founders, has served as a member of our board of
directors since our inception in September 1998, and as our Chief Executive
Officer since April 2011. From July 2001 to April 2011, Larry served as our
President, Products. In addition, from September 1998 to July 2001, Larry
Page 1 of 21

served as our Chief Executive Officer, and from September 1998 to July
2002, as our Chief Financial Officer. Larry holds a Master of Science degree in
computer science from Stanford University and a Bachelor of Science degree
in engineering, with a concentration in computer engineering, from the
University of Michigan.
Sergey Brin, one of our founders, has served as a member of our board of
directors since our inception in September 1998. From July 2001 to April
2011, Sergey served as our President, Technology. In addition, from
September 1998 to July 2001, Sergey served as our President and chairman
of our board of directors. Sergey holds a Master of Science degree in
computer science from Stanford University and a Bachelor of Science degree
with high honors in mathematics and computer science from the University
of Maryland at College Park.
Eric E. Schmidt has served as the Executive Chairman of our board of
directors since April 2011 and as a member of our board of directors since
March 2001. From July 2001 to April 2011, Eric served as our Chief Executive
Officer. He was the chairman of our board of directors from March 2001 to
April 2004, and again from April 2007 to April 2011. Prior to joining us, from
April 1997 to November 2001, Eric served as chairman of the board of
directors of Novell, Inc., a computer networking company, and, from April
1997 to July 2001, as the Chief Executive Officer of Novell. From 1983 until
March 1997, Eric held various positions at Sun Microsystems, Inc., a supplier
of network computing solutions, including Chief Technology Officer from
February 1994 to March 1997, and President of Sun Technology Enterprises
from February 1991 until February 1994. Eric was previously a director of
Apple Inc., a designer, manufacturer, and marketer of personal computers
and related products, from 2006 to 2009. Eric holds a Doctoral degree and a
Master of Science degree in computer science from the University of
California, Berkeley, and a Bachelor of Science degree in electrical
engineering from Princeton University.
L. John Doerr has served as a member of our board of directors since May
1999. John has been a General Partner of Kleiner Perkins Caufield & Byers, a
venture capital firm, since August 1980. John has also been a member of the
board of directors of Amyris, Inc., a synthetic biology company, since May
2006, and serves as chair of its nominating and governance committee and
as a member of its leadership development and compensation committee;
and Zynga Inc., a provider of social game services, since April 2013. John
was previously a director of Amazon.com, Inc., an internet retail company,
from 1996 to 2010. John holds a Master of Business Administration degree
from Harvard Business School, and a Master of Science degree in electrical
engineering and computer science, and a Bachelor of Science degree in
electrical engineering from Rice University.
Page 2 of 21

John L. Hennessy has served as a member of our board of directors since

April 2004, and as Lead Independent Director since April 2007. John has
served as the President of Stanford University since September 2000. John
has also been a member of the board of directors of Cisco Systems, Inc., a
networking equipment company, since January 2002, and serves on its
nominating and governance committee and acquisition committee. He also
serves as a trustee of the Gordon and Betty Moore Foundation. From 1994 to
August 2000, John held various positions at Stanford, including Dean of the
Stanford University School of Engineering and Chair of the Stanford
University Department of Computer Science. John co-founded and served as
the chairman of the board of directors of Atheros Communications, Inc., a
wireless semiconductor company, from 1998 to 2010. John holds a Doctoral
degree and a Master of Science degree in computer science from the State
University of New York, Stony Brook, and a Bachelor of Science degree in
electrical engineering from Villanova University.
Top Management:
Tim Cook
Apple CEO Tim Cook announced several major changes to his management
team, saying that Scott Forstall, who runs the iOS team behind the iPhones
mobile software and much-maligned Maps app, will depart next year but stay
on in the interim as an advisor.
Chief Operating Officer
Tim Cook is the CEO of Apple and serves on its Board of Directors.
Before being named CEO in August 2011, Tim was Apple's Chief Operating
Officer and was responsible for all of the companys worldwide sales and
operations, including end-to-end management of Apples supply chain, sales
activities, and service and support in all markets and countries. He also
headed Apples Macintosh division and played a key role in the continued
development of strategic reseller and supplier relationships, ensuring
flexibility in response to an increasingly demanding marketplace.
Prior to joining Apple, Tim was vice president of Corporate Materials for
Compaq and was responsible for procuring and managing all of Compaqs
product inventory. Previous to his work at Compaq, Tim was the chief
operating officer of the Reseller Division at Intelligent Electronics.
Angela Ahrendts
Senior Vice President, Retail and Online Stores

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Angela Ahrendts is Apple's senior vice president of retail and online stores,
reporting to CEO Tim Cook.
Angela is responsible for the operation and expansion of Apple retail and
online stores, which have redefined the shopping experience for hundreds of
millions of customers around the world. Apple retail stores set the standard
for customer service with innovative features like the Genius Bar, personal
setup and one-to-one personal training to help customers get the most out of
their Apple products.
Angela joined Apple from Burberry, where she served as CEO and led the
company through a period of outstanding global growth. Prior to Burberry,
she was executive vice president at Liz Claiborne Inc., and earlier in her
career she served as president of Donna Karan International.
Eddy Cue
Senior Vice President, Internet Software and Services
Eddy Cue is Apple's senior vice president of Internet Software and Services,
reporting to CEO Tim Cook.
Eddy oversees Apple's industry-leading content stores including the iTunes
Store, the revolutionary App Store and the iBookstore, as well as Siri, Maps,
iAd and Apple's innovative iCloud services. Eddy's team has an excellent
track record of building and strengthening online services to meet and
exceed the high expectations of Apple's customers.
He is a 25-year Apple veteran and leads a large organization of amazing
people. Eddy played a major role in creating the Apple online store in 1998,
the iTunes Store in 2003 and the App Store in 2008. He also played a key role
in developing Apple's award-winning iLife suite of applications. In his early
years at Apple, he was a successful manager of software engineering and
customer support teams
2.External Environment:
Political Factors
Apple Inc has reportedly obtained 52% of its business from outside US in
2007. Due to the bad international relations, wars and terrorism might
influence Apple Inc in a huge way, and also the organization has no control
over these factors. Apple Inc manufactures a number of its parts and
products from outside the US, like Czech Republic, Ireland, China, Korea and
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Cork. The bad political relations between US and the other world have bad
outcomes for the Apple Inc (CNetnews 2012).
Economic Factors
The global economic crisis had huge impact on Apple Inc. The inflation rate
went high and so did the unemployment rate in the country, and since Apple
Inc products were viewed as luxury products, the customers started pending
less on them. US dollar value keeps fluctuating, and thus again which have a
bad impact on Apple Inc products, however the company has purchased
itself foreign currencies and thus, the economic effects on the company are
minimized. Thus, Apple Inc revenue has increased in the global market
(Apple Inc 2012).
Social Factors
Throughout the history of Apple Inc, two factors have been on the forefront
of Apple Inc products, the quality and the design of the product. Thus,
globalization plays a very important role in Apples products. As the world
cannot be imagined without the gadgets, thus Apple products have marked
their presence on the international market. Also, as the purchasing power of
the common has risen in various markets across the world the purchasing of
luxury products have gone up, for e.g. the iPhone, iPods and the latest
technology iPad. Possessing these items are considered as status symbols in
many societies which have also increased the sales of Apple Inc products.
Another big social influence to Apple Inc products is the rapid growth of the
music industry, which have increased markets over the cyber space as well.
The main virtual music store is the iTunes. Thus, in all Apple products have
benefitted from the social factors as it has began defining a modern
individual lifestyle.
Technological Factors
Apple Inc has invested largely in its product research and development field
and thus, Apple products are at the top of the new innovative products
ranking. The technology has been fast changing in the world and the market
for it has become gigantic, which has added to more and more competition
and thus, as soon as technological change are concerned the product life
cycle has been shortened drastically, which the Apple Inc takes the
advantage of by introducing newer products in the market, which ultimately
lead the market.
Legal Factors
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Nokia has filed various lawsuits against Apple Inc, claiming the violation of
13 additional patents by iPhone, iPad and iPod touch, this apart from US
complains covering 24 Nokia patents. Also, in China Apple Inc has been
fighting the battle for its right to the iPad trademark.

Environmental Factors
From reporting the entire carbon footprint to finding ways to reduce that
footprint, Apple takes a comprehensive approach to environmental
responsibility. Apples commitment to the environment includes properly
disposing of electronic equipment at the end of its useful life. It responsibly
recycle your computers and displays. On track towards achieving an
ambitious goal: to power every Apple facility entirely with energy from
renewable sources solar, wind, hydro and geothermal
Porters Five Factors Model:
Threat of New Entrants in an ever evolving industry such as the one that
Apple is in new entrants are always a threat. A company could be making
something in their garage as Apple did when they started. They could easily
make a product that competes with Apples simplicity and Microsofts
customization. While being taken off the top from a new entrants in the next
5 years seems unlikely there is always a possibility that a company can take
off and being the industry leader in one specific area that Apple specializes
in. It can be seen in other industries with companies such as Tesla who took
control of the electric car market right from under Toyotas feet. In the
technology industry there are quite a few barriers a company must overcome
if they wish to enter the market. The biggest factor is the cost of going into
the market. There is a huge amount of capital needed to go into business in
the technology sector. This isnt only with designing the product, it also
involves all of the opportunity cost with the time it takes to establish your
brand, the legal part of business with getting patents on your intellectual
property, and the cost of marketing your new product. Brand recognition is a
huge factor in the industry and that is hard to gain in the beginning. The
industry is also largely segmented so there are countless amounts of
competitors trying to do the same thing and many offer nearly the same
products. To be successful a company must be able to differentiate
themselves from all other companies. From there the industry is also
evolving at an exponential rate which works against a company that is
starting out because by the time they get their first product out they should
already have their next one out. While it is possible as mentioned earlier with
Page 6 of 21

an ingenious idea like the Tesla Model S, it is not easy to do and a big threat
is unlikely to any industry leader in the next 5 years.
Threat of Substitute is the biggest threat to Apple. In the mobile computer
industry it can be seen with their competitor Samsung. At the moment
Samsung is technically speaking more innovative and is offering more value
with new products compared to Apple. Being in the spotlight is almost a
disadvantage to Apple because other companies arent worrying about each
other, they are taking aim at Apple and are each offering something a little
better than each IPhone or computer being put out on the market. While
Apple does come out with the new product first, 2 months down the road
another company beats them by a small margin, forcing Apple to reinvent
their product yearly, and at the price consumers pay they are not always
happy with what Apple produces. That just starts with the hardware
substitutes, after that you need to look into mobile OS providers, with the
industry leader being Android by Google by quite a large margin.
Googles success is attributed to the fact that they sell their operating
system to so many devices whereas Apples software is only used with
Apples hardware. With so many other options both cheaper and more
expensive, the target market for Android is much more widespread. In the
PC OS market Apple has not reinvented their systems since 1999 when they
launched OS X. While over the years they have modified it and tweaked it in
many ways, the faade of the system has not changed in many years. They
can say if it aint broke dont fix it, but it is only a matter of time until the OS
becomes obsolete, because 10 years with the same base model is an
eternity in technology. Windows typically reinvents their OS every 3 years or
so. Whether it is a bad thing or not can be argued for days but they are
trying to perfect the consumer experience across all of their devices. If Apple
does not continue to reinvent their hardware as they have in the past decade
they may fall victim of not offering enough of a variety to consumers in this
worldwide market of technology.
Bargaining power of buyers
This threat is huge to Apple. This is because there are so many choices for
consumers throughout the industry. Up until recently with the release of the
IPhone 5c there was no option for consumers who were looking for a cheap
device because the iPhone was always at the top of the market for price.
Apple hopes to bring in the price focused customer with the 5C but run the
risk of tarnishing their brands exclusivity and product quality because the
product is not top of the line. This is a battle that Apple may be entering a
little late, but they hope that they will spark interest with the 5C in the global
market. If they were to do well with the low priced product option for mobile
it is possible that we may see lower priced PCs and tablets over the next few
year to battle Androids low priced options. Throughout the 2000s when Jobs
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led the company the threat of bargaining power of buyers was low because
options that were as good as Apple was very low. Most of their products were
seen to be years ahead of the competition, whereas today they are seen on
par with many other hardware and software developers.
Bargaining power of Suppliers is a unique threat to Apple. They turn to
their top mobile competitor, Samsung to produce the chips they use in their
phones and tablets. At any point Samsung could try and end their contract to
produce Apples chips or try and bargain to give Apple non top of the line
chips for their phone. This makes the bargaining power of their suppliers a
huge threat. It is a unique situation and Apple needs to tread lightly with this
supplier to ensure they have the best chip on the market. Apple is also
finding it difficult on their end to leave Samsung. When Apple hit the mobile
market they were glad to use Samsungs chips, memory, and screens
because they were not a direct competitor, while today Samsung is their
biggest mobile competitor and they are eclipsing Apple with products sold
even with the success of the new IPhone. In July Apple finally made a deal
with a company, Taiwan Semiconductor Manufacturing Co., to begin
producing their chips in 2014. While the switch will not be immediate, they
hope to eventually be free from the need of Samsung. On the new IPhones
they have stopped using Samsung screens and have turned to Sharp to
provide their screens. However the IPad 3 still uses the Samsung screens and
Samsung recently bought 3% of Sharps sales making them the fifth largest
shareholder in the company. This was a move to hopefully gain a say with
who the company sells to so that Samsung can still sell to the technology
giant Apple. In 2012 they recorded $5 billion in sales just providing
components to Apple. Apple cannot drop Samsung completely because of
how large of a component they are in all of their mobile products. It is a
unique landscape for these giant tech companies with Apple being bound to
their biggest competitor for such an integral part of their products. The legal
battles between this competitor and Apple have been on the radar for the
past few years and it will be interesting to see where Apple will be able to go
if they ever completely drop their biggest supplier (Lessin, Luk, Osawa et al.,
2013).
Competitive Rivalry There may not be any company in the world with as
much competition as Apple. With every product they come out with they
have to compete with hundreds of other products. As mentioned earlier they
have a lot of factors going against them in this competition, but manage to
keep a leg up on the competition with their hardware design, cult following,
and ability to create products ahead of the competition. This mix of success
cannot be relied on forever since other companies are starting to gain
traction in each of those fields. As of right now the biggest threat to Apple is
Samsung. Samsung saw huge success with the Galaxy S4 and many users
switched to this feature heavy phone. Samsung is innovating at a higher rate
Page 8 of 21

than Apple at this point in time and it is giving many users a reason to switch
over. Android OS is running perfectly at this point in time and paired with
Samsung software and hardware it maximizes it capabilities. Apple is hard
pressed to keep up with Samsung this year with Samsungs full product line
revitalization and new invention. In September Samsung released a smart
watch which pairs with a users mobile device and increases the consumer
experience. It is obvious that Apple will have to come out with some sort of
similar device but by then it may be too late for the tech giant. Samsung is
also not following the typical guidelines for releasing products. Most
companies wait for big technology expos or hold press conferences to
release their products, Samsung has been releasing their products on their
own schedule, changing the way devices are being released (Tsukayama et
al., 2013). Another big competitor which threatens Apple is Google. Google
over the recent year cant seem to do anything wrong, which is increasing
their fan base every day. Google competes directly with Apple on nearly
every front aside from hardware, and are in many cases beating Apple in
nearly every field. The most obvious is their competition is Android vs. IOS.
This battle has been heated since 2009 when Android was purchased by
Google and put on the market to major mobile markets. They are beating
Apple when it comes to the amount of products that their OS is used in and
when looking at the perks that the Android OS has it isnt hard to see why
they are doing so well. Android is more developer friendly and Google offers
a dev. line of products to their consumers known as Nexus. This platform
allows devs to make apps natively on android products and is largely
unrestricted. Apple is much more highly regulated and apps cannot be
downloaded anywhere but from the app store. Google also competes with
Apple in the form of web browser. Apple has Safari and Google has Chrome,
and in this market there is almost no contest. The user experience that
Chrome offers is unparalleled to any other browser because of the linking to
the worlds most widely used search engine. Within the browser Google also
offers many other things that other browsers do not offer such as seamless
usage of Google Docs, an online replacement to Microsofts Office software.
Safari is an outdated browser that focuses on pure simplicity but for many
users the simplicity is too simple. Among other areas in which both Apple
and Google compete, an interesting competition may be heating up soon.
Google released a PC OS known as Google Chrome OS with their sights set
on making the PC experience simpler and cheaper. They have released very
low priced PCs known as Chromebooks which have the Chrome OS. It is
essentially a machine solely used for the internet, which is what many
consumers use their $2000 machines for. It will be interesting if the idea
catches on and takes away market share from Apples successful Macbook
line (Vascellaro, Kane). Apple has their work cut out for them because of how
segmented their business has become, while no one is going directly toe to
toe with them on every platform, they have many competitors across nearly
even medium of business that they are in.
Page 9 of 21

3.Internal Environment:
Corporate Culture:
Apples ruthless corporate culture is just one piece of a mystery that virtually
every business executive in the world would love to understand. The culture
of Apple is based on an ideal that self-motivated individuals will work harder
if they do not have a boss micromanaging every action.
Finance
It is important to note that Apple's sales and profits were both substantially
higher in 2004 than in previous years. Total revenue for 2004 was $8,279
million, which was a 33 percent increase from 2003 total revenue of $6,207
million. Net income for 2004 of $276million was a substantial 300 percent
improvement from 2003 net income of $69 million. Net sales in the Americas
for 2004 was $4,019 million. This was a 26 percent increase over 2003net
sales for the Americas of $3,181 million. For 2004, net sales for the Americas
accounted for almost 49 percent of Apple's total net sales for 2004 of $8,279
million. In 2004, sales in Europe also increased, from 2003 net sales of
$1,309 million to 2004 net sales of $1,799. This represented an increase of
37 percent for 2004. In 2004, net sales in Europe accounted for almost 22
percent of total net sales for Apple, making Europe Apple's second-largest
market. Sales in Japan fell slightly (3 percent) to $677 million for 2004 from
2003 net sales of $698million. However, Japan still accounted for just over 8
percent of Apple's total net sales for 2004. Net sales in the Asia-Pacific region
increased almost 51 percent in 2004 from $398million in 2003 to $599
million in 2004, meaning sales in the Asia-Pacific region accounted for just
over 7 percent of Apple's total net sales for 2004. However, the largest shift
in Apple's net sales was in the retail segment.
Apple has introduced the eMac line of personal computers with an integrated
cathode ray screen, as compared to the now common flat-panel screens
targeted to the education segment of the personal computer market. Apple
had found that the LCD screen on its iMac computers was not suited to the
abusive treatment many computers receive in the K-12 education setting.
Therefore, the eMac, with its traditional cathode ray tube, was introduced to
address this segment of the market. In addition, Apple also produces the
Xserve line of rack-mounte dservers to address the growing demand for
company Web servers.
Apple's most impressive and fasting-growing market segment has been the
iPod line of digital music players and the iTunes music store Web site. The
iPod's 2004 net sales of $1,306million is a 279 percent increase over 2003
net sales of $345 million. Sales of iPods accounted for almost 16 percent of
Apple's total net sales for 2004, placing the iPod just behind the PowerBook
and Power Macintosh product lines for 2004. In addition, the sale of music
Page 10 of 21

through the iTunes Web site soared 672 percent in 2004, accounting for $278
million or just over 3 percent of Apple's total net sales for 2004.
Ratio
Current ratio
Quick ratio
Cash ratio
Gross Margin
Operating Margin
Pre-Tax Margin
Profit Margin
Pre-Tax ROE
After Tax ROE

9/27/2014
108
105
40
39

9/28/2013
168
164
93
38

29
29
22
48
35

29
29
22
41
30

Market
In terms of developing a strategic vision as it relates to marketing, below are
some of the key takeaways to consider from Apple when formulating a longterm strategy for success:
1. Identify Trends By recognizing such trends as digital consumerism
and that the PC industry was becoming highly commoditized, Jobs was
able to visualize a strategy for a product that met consumer needs. To
uncover such insights, its important to look across industries, strategic
groups, buyer groups, the scope of a product or service, the functionalemotional orientation of an industry, and time.
2. Analyze Competitors When research pointed to the fact that Apple
was losing market share and cannibalizing sales due to their strict
licensing policy, Jobs ventured out to contract with Microsoft to develop
core products, while at the same time making the decision to utilize
Intel chips in their computers, enabling Apple to build laptops that
were both faster and less power hungry. By thoroughly understanding
his competition, he was able to partner with competitors in ways that
were not only mutually beneficial, but downright advantageous.
3. Innovate By following a Schumpeterian model of creative
destruction and focusing on the needs and wants of the consumers
rather than how to just improve upon an existing product, Apple was
able to continuously re-think its product line and invent new products
that re-defined the traditional boundaries of the market. Innovation
allows for companies to capitalize on the first mover advantage,

Page 11 of 21

resulting in the realization of high up-front market share and profit

margins.
4. Position Your Product - Because many computer systems and
related products can be easily replicated, finding ways to extend the
life of a product through complementary offerings is almost as
important as re-invention. For example, the App Store served as a
complement to the iPhone which resulted in $1 billion in annual profits.
And upon the launch of the iTunes store, an exponential demand for
iPods was created.
5. Build Brand Awareness Through utilizing creative campaigns and
non-traditional advertising channels for the Mac brand, Apple
embarked on a truly unique differentiation strategy, which helped grow
brand awareness.
6. Optimize Distribution Apple revamped its distribution system to
move from smaller outlets to national chains. They also opened their
own retail stores (280 stores in 10 countries), which now account for
16% of Apples total revenue. The retail stores were a success because
they provided users with an opportunity to learn about, experiment
with, and test drive products.
7. Dont Forget Your Customers - Apple is known for superior
customer service. In fact, just the other day I corresponded with a
customer service representative though their online chat function and
received a thorough answer to my inquiry. By creating and sustaining
a superior customer service model, competitive advantage can be
easily achieved.

Information System:
Apple Inc In the present age, Apple is the world's second-largest information
technology company. Therefore, in order to apple MIS knowledge and skill
into the reality, Apple is supposed to be an appropriate firm to analyze MIS
issues. These issues will be represented in following order:
1. Understanding business and information system requirements.
2. Analyzing financial performance.
3. Achieve operational excellence: analyzing competitive strategy.
4. Improving decision making: developing a Website privacy policy.
5. Improving decision marking: Designing the customer database
6. Improving operational excellence: Identifying supply chain management
solutions
Page 12 of 21

7. Achieving operational excellence: Developing an E-Commerce strategy

8. Achieving operational excellence: Identifying opportunities for knowledge
management.
4.Analysis of Strategic Factors:

Apple SWOT Analysis

Strength:

iTunes Music Store is a excellent source of revenue, especially with the

iPod and the accessibility on Windows platform.

Apple Computer are expert in Developing own software and hardware.

Apples niche audience provides the company with some lagging from
the direct price competition.

Giving a face-lift to desktop and notebook lines.

technology can be used to improve product awareness and sales.

Low debtmore maneuverable.

Apple Computers have good brand loyalty.

Partnership with Intel Computers in 2006 Present.

Strong Research & Development Department.

Weaknesses:

Weak relationship with Intel and Microsoft.

Weak presence in business arena.

The product life cycle of Apple products are very small for that reasons
revenues are more depend on launch of new products and services.

Weak presence in markets other than education and publishing.

Slow turn around on high demand products.

Apples market share is far behind from major competitor Microsoft.

Page 13 of 21

In past the relationship between Steve jobs and employee were not
good which result in reputation loss.

Opportunities:

Increase in worms and viruses on PCs so the antivirus solution can be

developed by Apple

Large population (Gen X&Y) which are extremely individualistic and

name brand conscious.

The ties of apple other companies are weak, Apple can develop good
relationship for joint ventures

Downloadable music and MP3 players are highly marketable.

The online sales of computer are increasing with rapid speed.

The laptop market growth is high; Apple Computers should focus to

develop new models to cater the need of customers.

Threats:

Companies not seeing Apple as compatible with their software.

Apple facing strong competition from Dell, HP, Sony and Toshiba in
laptop segment.

Downloading free music from other online source without paying cost
is common it may impact the iTunes sales.

Apple software, Cell phone and hardware are expensive as compared

to other competitors such as Dell.

The long lasting recession may impact the sales of the company due to
higher prices of the products and services

Microsoft launched Microsoft Vista, Windows 7 which is gaining market

share.

The switching in technology is very fast

5. Identification of Strategic Issues:

External Factor Analysis Summary
Page 14 of 21

External Strategic Factors

Opportunities
O1.Accelarating growth of the PC
market
O2.Intergation
of
portable
electronics into the lifestyle of
urban people
O3.Growing preference of the
Unix workstations among IT
professionals
O4.The rise of the laptops
popularity
O5.Continuous improvement of
human-computer interfaces

Weig
Ratin Weight
ht
g
ed
Scor
e
0.13

4.00

0.52

also at a good rate

0.12

4.00

0.48

one of the
opportunities

0.07

2.00

0.14

will take more time

0.08

4.00

0.20

its growing

0.10

3.00

0.30

avaragelly good

0.50
Threats
T1.Fierce price and market
share
competition
among
computer manufacturers
T2.Surplus of cheaper PCs and
computer parts in the global
market leading to lower profit
margins
T3.Introduction of direct-sales
approach and JIT delivery by Dell
T4.Acqisition of Compaq by HP in
2002, amking it the largest
company in the industrt.
T5.Introducing of environmental
regulations
on
financial
responsibility of companies for
recycling and disposal of used
products
Total score

Comments

best

1.50

0.12

1.00

0.12

a great threat

0.08

1.60

0.13

Still under control

0.10

4.00

0.40

well positioned

0.10

3.00

0.30

sprading

0.10

3.00

0.30

well positioned

0.50
1.00

Internal Factor Analysis Summary

Page 15 of 21

1.25
2.75

Wei
Internal Strategic ght
Factors
Strengths
S1.Innovative thinking to
create high quality,
digital products leading
to strong loyality of
customers
S2.Robust
financial
performance over the past
few years due to continuous
cost reductionstrategies
S3.Trendsetting design and
integration of digital media
with a strategy of Mac-only
Internet applications
S4.Bricks
and
mortar
offering of Apple products in
exclusive retail stores, and
24-hour
online
sale
deppartment
S5.Offbeat
marketing
strategies focused on less
mainstream computer users
S6.Excellent track record in
customer service

Rati
ng

Weigh
ted
sco s
re

Comment

0.16

4.00

o.60

It is one of the best

strengths

0.06

3.00

0.15

Helps to increase
the efficiency

0.10

3.00

0.30

Should keep it up

0.10

3.00

0.30

Is a good side of the

company

0.15

3.00

0.45

Has a good impact

on the organization

0.07

3.00

0.15

Making
unique

it

expansion

0.50
Weakness
W1.High price of many 0.17
products
compared
to
computers
W2.Late
venture
into 0.10
Operating
Systemm
licensing
W3.Restriction of software 0.06
usage by hardware platform
W4.Over dependence on 0.05
Steve Jobs especially for
new ideas
W5.Declining ratio of R&D 0.07
investment over revenues
0.50

more

1.95
3.00

0.51

Creating
problem

4.00

0.40

2.00

0.12

Has
a
great
negative impact on
the organization
less risk to the
organization

4.00

0.60

Is a problem

0.00

0.00

Demotivate
to
achieve the goals

0.85
Page 16 of 21

Total score

1.00

2.74

Strategic Factor Analysis Survey

Strategic Factor

Weight

Rating

Weigh
ted
Score

O1.Accelarating growth
of the PC market
O2.Intergation
of
portable electronics into
the lifestyle of urban
people
T3.Introduction of directsales approach and JIT
delivery by Dell
T4.Acqisition of Compaq
by HP in 2002, amking it
the largest company in
the industrt.
S1.Innovative thinking
to create high quality,
digital products
leading to strong
loyality of customers
S5.Offbeat marketing
strategies focused on
less mainstream
computer users
W4.Over dependence on
Steve Jobs especially for
new ideas

0.13

4.00

0.52

Short

Interm
ediary

long

X
.12

4.00

.48
X

0.10

4.00

0.40
X

.10

3.00

.30
X

0.16

4.00

o.60
X

.15

3.00

.45
X

0.05

4.00

0.60
X

.17

3.00

.51

W1.High price of many

products compared to
computers

Tows matrix
Page 17 of 21

Comment
s

Inter Strength (S)

nal
Factors(
IFAS)

Weakness (W)
1. Global audience and 1.Poor history regarding
established market leader social and ethical issues
2.
Worldwide
supplies

range

of 2.
Strong
footwear

3. Good range and quality of 3. Reliance

products
labor

focus
on

on

cheap

External Factors
(EFAS)
Opportunities (O)
1.Increase sports initiatives

SO Strategies
WO Strategies
- Use
their
current
- Use the Olympics
market position to help
and
sporting
2.
Potential
for
new
influence and promote
events to represent
technology
health and awareness
themselves
- Migrate customers to
- Create
a
wide
3. Growing prefernce to
the web strategy
range of products
shop online
- Increase
partnership
- Take advantage of
strategies
and
the online market,
marketing
showcasing
- Continue
developing
changes regarding
technology
ethical issues and
sweat shops
- Lower
production
cost
Threat (T)
ST Strategies
WT Strategies
1.Compititivee market
Constantly create new
- Try to move away
designs and ideas
from
3rd
party
2. Ever changing market
- Expand their range of
manufacturing
to
supplies to keep the
improve quality
3. The recession
cost low
- Keep
their
- Search for innovative
competitive
concepts
to
advantage by using
outcompete
their
customization and
competition
expand by some
means.

Page 18 of 21

6.Strategic Alternatives and recommendation:

Strategic Alternatives
ALT 1: Improving PC
PC Pros
It is much cheaper than the Apple Mac.
Getting cheap or even free software for PCs is relatively easy.
Most anti-spyware and anti-virus programs work well with the PC.
PC Cons
The PC is more open to virus threats.
Windows XP is a clumsier interface than the Apple Mac operating system OS X.
Sometimes, software for PCs tends to be unnecessarily complex.
ALT 2: Improving Apple Mac
Mac Pros
If aesthetics impress us, we'll love our Apple Mac.
Mac's software is far more superior to Windows PC.
The operating system OS X is more secure than Windows.
Mac Cons
The Mac is much more expensive than a basement version PC.
We'll find it harder to get our Mac repaired or to find support.
Shareware or freeware for the Apple Mac is relatively rare when compared to the PC.
Other alternatives
Page 19 of 21

 Extend their current product line to include some products with a lower price point. Ex.
Re-launch Mac Mini.
Expanding their distribution network to reach more consumers by Internet Providers,
Third Party Retail Stores, Flagship Stores.
To continue investments in Research and Development with Improved new generations
of products & new features.
Become an online search machine and platform for online advertising by Research and
Development in online search, advertising & monitoring the works of Google and Yahoo.
Build specific products of high quality, but lesser prices, for the huge populations of
India and China that are passionate about computers, mobile phones and music.
Increase number of Apple stores.
Continue and intensify the search for innovative, stylish and useful products in its
existing area of operations.
Make productive use of strong cash reserves

Recommendations
As a company, Apple has to continue to innovate in order to maintain a
competitive advantage because its businesses are highly dependent on
rapidly changing technologies and are also situated in dynamic industries
where the average lifespan of products runs from about 7 to 8 months. These
industries experience very high levels of competition due to the presence of
many well-established players and so in order for Apple to survive it cannot
afford to be complacent.
Though Apple consistently creates innovative products, it would be
appropriate for it to aware of the risk of its products cannibalizing on each
other. For instance, the introduction of the iPod has garnered a large amount
of praise for Apple and has increased it profit margins, recent studies show
that the iPod phenomenon might be affecting the sales of traditional PCs or
even Macs.
Apple is well known for developing products that are intuitively user friendly
and a recommendation could be for them to continue to tailor their products
in even simpler ways that make it easier for users of other
platforms/software to build a comfort level that attracts them to Apples
products. This could be especially true in the PC industry where traditional
Page 20 of 21

users of Microsoft usually have a difficult time adjusting/switching to the

Mac, better steps could be taken to make the transition from PC to Macs
easier.
Though Apples foray into the TV business has met with less success
compared to its other initiatives and products, one could argue that the TV
industry still holds a lot of potential especially in a continually integrative
media environment where media can be easily shared across various
platforms and devices. The recommendation here is for Apple to look at relaunching Apple TV but this time preferably building its own high resolution
flat screen TVs embedded with the functionalities of the original Apple TV
device.

Conclusion
So far, this report has attempted to lay out in detail Apples business model
and its competitive strategies in the various markets it currently operates in,
namely the PC, consumer electronics and computer software industries. To
begin, from the research and analysis done up to this point, it is our
unanimous opinion that as a company, Apples major strategy is
differentiation as classified by Porter (Porter, 1980).
Apple focuses on innovating products that redefine the traditional boundaries
of industries it operates in as such it creates products that become the
industry standard which all other competitors attempt to emulate. In
addition, by being a first mover in terms of innovation, Apple is able to
charge premium prices for its products and still remain competitive.
Another key note with regards to Apples strategy lies in its long established
business model of owning and integrating both its hardware and software.
This model has been in place since Apple introduced Mac and has been
carried over to all its current businesses in the MP3, Tablet PC and
Smartphone markets. By maintaining control over its hardware and software,
it is able to ensure that all the content delivered across its iOS platform is
easily accessible to customers and compatible with all its products.
Going into the future, it remains to be seen how Apples competitive strategy
will evolve; however, one thing is for certain the key to whatever path they
may choose to follow depends heavily on their ability to innovate
consistently.

Page 21 of 21